U.S. BANK
PROMISSORY NOTE
Principal Loan Date Maturity Loan Call Collatera Accoun Office Initial
No l t r s
$3,500,000.0 04-22- 05-01- dh
0 1997 2000
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Borrower Emeritus Properties VI, LENDER U.S. Bank of Washington,
: Inc., :
a Washington corporation National Association Commercial
3131 Elliott Ave., Suite Real Estate Loan Administration
500
Seattle, WA 98121-1031 1301 Fifth Avenue, 20th Fl., WWW-
967
P.O. Box 720
Seattle, WA 98111-0720
PRINCIPAL AMOUNT: $3,500,000.00
DATE OF NOTE: April 22, 1997
PROMISE TO PAY. EMERITUS PROPERTIES VI, INC., a
Washington corporation ("Borrower") promises to
pay to U. S. BANK OF WASHINGTON, National
Association ("Lender"), or order, in lawful money
of the United States of America, the principal
amount of Three Million Five Hundred Thousand &
00/100 Dollars ($3,500,000.00), together with
interest on the unpaid principal balance from May
1,1997, until paid In full.
PAYMENT. Borrower will pay this loan in one
principal payment of $3,500,000.00 plus Interest
on May 1, 2000. This payment due May 1, 2000, will
be for all principal and accrued interest not yet
paid. In addition, Borrower will pay regular
monthly payments of all accrued unpaid Interest
due as of each payment date, beginning June
1,1897, with all subsequent interest payments to
be due on the same day of each month after that.
Interest on this Note is computed on a 365/360
simple interest basis; that is, by applying the
ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days
the principal balance is outstanding. Borrower
will pay Lender at Lender's address shown above or
at such other place as Lender may designate In
writing.
VARIABLE INTEREST RATE. The interest rate on this
Note is subject to change from time to time based
on changes In an index which is the Lender's Prime
Rate. This is the rate of interest which Lender
from time to time establishes as its Prime Rate
and is not, for example, the lowest rate or
interest which Lender collects from any borrower
or class of borrowers. (the "index"). The interest
rate shall be adjusted without notice effective on
the day Lender's Prime Rate changes. Lender will
tell Borrower the current Index rate upon
Borrower's request. Borrower understands the
Lender may make loans based on other rates as
well. The interest rate change will not occur more
often than each day. The Interest rate to be
applied to the unpaid principal balance of this
Note will be at a rate of 1.000 percentage point
over the Index. NOTICE: Under no circumstances
will the interest rate on this Note be more than
the maximum rate allowed by applicable law:
PREPAYMENT. Borrower may pay all or a portion of
the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation
to continue to make payments under the payment
schedule. Rather, they will reduce the principal
balance due.
LATE CHARGE. If a payment is 15 days or more late,
Borrower will be charged 5.00% of the regularly
scheduled payment.
DEFAULT. Borrower will be in default if any of the
following happens: (a) Borrower fails to make any
payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to
comply with or to perform when due any other term,
obligation, covenant, or condition contained in
this Note or any agreement related to this Note,
or in any other agreement or loan Borrower has
with Lender. (c) Borrower defaults under any loan,
extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in
favor of any other creditor or person that may
materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of
the Related Documents. (d) Any representation or
statement made or furnished to Lender by Borrower
or on Borrower's behalf is false or misleading in
any material respect either now or at the time
made or furnished. (e) Borrower becomes insolvent,
a receiver is appointed for any part of Borrower's
property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower
under any bankruptcy or insolvency laws. (f)
Borrower is in default under any other note,
security agreement, lease agreement or lease
schedule, loan agreement or other agreement,
whether now existing or hereafter made, between
Borrower and U.S. Bancorp or any direct or
indirect subsidiary of U.S. Bancorp. (g) Any
creditor tries to take any of Borrower's property
on or in which Lender has a lien or security
interest. This includes a garnishment of any of
Borrower's accounts with Lender. (h) Any guarantor
dies or any of the other events described in this
default section occurs with respect to any
guarantor of this Note. (i) A material adverse
change occurs in Borrower's financial condition,
or Lender believes the prospect of payment or
performance of the Indebtedness is impaired.
If any default, other than a default in payment,
is curable and if Borrower has not been given a
notice of a breach of the same provision of this
Note within the preceding twelve (12) months, it
may be cured (and no event of default will have
occurred) if Borrower, after receiving written
notice from Lender demanding cure of such default:
(a) cures the default within fifteen (15) days; or
(b) if the cure requires more than fifteen (15)
days, immediately initiates steps which Lender
deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and
completes ell reasonable and necessary steps
sufficient to produce compliance as soon as
reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare
the entire unpaid principal balance on this Note
and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that
amount. Upon default, including failure to pay
upon final maturity, Lender, at its option, may
also, it permitted under applicable law, increase
the variable interest rate on this Note to 6.000
percentage points over the Index. The interest
rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone
else to help collect this Note if Borrower does
not pay. Borrower also will pay Lender that
amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees and
Lenders legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-
judgment collection services. If not prohibited by
applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by
law. This Note has been delivered to Lender and
accepted by Lender in the State of Washington. It
there Is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the
courts of King County, the State of Washington.
Subject to the provisions on arbitration, this
Note shall be governed by and construed In
accordance with the laws of the State of
Washington.
COLLATERAL. This Note is secured by, in edition to
any other collateral, e Deed of Trust and an
Assignment of All Rents dated April 22, 1997, to a
trustee in favor of Lender on real property
located in Maricopa County, State of Arizona, all
the terms and conditions of which are hereby
incorporated and made a part of this Note.
ARBITRATION. Lender and Borrower agree that all
disputes, claims and controversies between them,
whether individual, joint, or class in nature,
arising from this Note or otherwise, including
without limitation contract and tort disputes,
shall be arbitrated pursuant to the Rules of the
American Arbitration Association, upon request of
either party. No act to take or dispose of any
collateral securing this Note shall constitute a
waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive
relief or a temporary restraining order; invoking
a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or
Imposition of a receiver; or exercising any rights
relating to personal property, including taking or
disposing of such property with or without
judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or
controversies
concerning the lawfulness or reasonableness of any
act, or exercise of any right, concerning any
collateral securing this Note, including any claim
to rescind, reform, or otherwise modify any
agreement relating to the collateral securing this
Note, shall also be arbitrated, provided however
that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator
may be entered in any court having jurisdiction.
Nothing in this Note shall preclude any party from
seeking equitable relief from a court of competent
jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action
brought by a party shall be applicable in any
arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the
commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of
this arbitration provision.
ORAL AGREEMENTS. ORAL AGREEMENTS OR ORAL
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
ADDENDUM. An addendum is attached to this document
which modifies certain of the documents terms. By
its attachment, it is made a part hereof.
GENERAL PROVISIONS. Lender may delay or forgo
enforcing any of Its rights or remedies under this
Note without losing them. Borrower and any other
person who signs, guarantees or endorses this
Note, to the extent allowed by law waive
presentment, demand for payment, protest and
notice of dishonor. Upon any change In the terms
of this Note, and unless otherwise expressly
stated in writing, no party who signs this Note,
whether as maker guarantor, accommodation maker or
endorser, shall be released from liability. All
such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan,
or release any party or guarantor or collateral;
or Impair, fail to realize upon or perfect
Lender's security Interest In the collateral; and
take any other action deemed necessary by Lender
without the consent of or notice to anyone. All
such parties also agree that Lender may modify
this loan without the consent of or notice to
anyone other than the party with whom the
modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND
UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE,
INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE AND
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
EMERITUS PROPERTIES VI, INC., a Washington
corporation
By: /s/ Raymond R. Brandstrom, President
--------------------------------------
Raymond R. Brandstrom, President
By: /s/ Kelly J. Price, Vice President &
Secretary
--------------------------------------
Kelly J. Price, Vice President & Secretary